BUSINESS STUDIES in ACTION 5TH EDITION

Transcription

1 BUSINESS STUDIES in ACTION 5TH EDITION HSC COURSE SAMPLE CHAPTER 14 Stephen CHAPMAN Mohan DHALL Rosalinda GALLINA Natalie DEVENISH Michael DOHERTY Cassy NORRIS

2 BUSINESS STUDIES IN ACTION SERIES 4TH EDITION PRELIMINARY COURSE CHAPMAN, GALLINA, DEVENISH OCTOBER 2014 $ TH EDITION HSC COURSE CHAPMAN, DHALL, GALLINA, DEVENISH, DOHERTY, NORRIS AUGUST 2014 $77.95 trim size 216mm x 279mm JACARANDA S SOLUTIONS FOR YOUR TEACHING AND LEARNING CHALLENGES BUSINESS STUDIES in ACTION 4TH EDITION PRELIMINARY COURSE BUSINESS STUDIES in ACTION 5TH EDITION HSC COURSE > ENGAGING STUDENTS AND ENHANCING UNDERSTANDING OF CONCEPTS Clear explanations of complex business concepts aided by graphic organisers. HSC key process verbs are used consistently in graded question banks to prepare students for HSC study. Topical case studies reflect business in action in the real world. > KEY FEATURES OF THE NEW EDITIONS Rigorous adherence to the content of Business Studies Stage 6 syllabus. Greater emphasis on syllabus learn tos as well as learn abouts. Both year levels have been fully updated with new Snapshots, BizFacts and statistics. A new major case study on Wotif Group is included for the HSC text. HSC key process verbs are colour-coded and used in graded questions throughout both texts. Enhanced ebookplus to make using the text online even easier. SAVE WITH VALUE PACKS Print, digital or blended value packs are available. Choose a Business Studies in Action value pack that suits your needs, or ask your Jacaranda Sales Consultant about customised options for your school. SAVE WITH VALUE PACKS Stephen CHAPMAN Rosalinda GALLINA Natalie DEVENISH > TEACHER SUPPORT Stephen CHAPMAN Mohan DHALL Rosalinda GALLINA Natalie DEVENISH Michael DOHERTY Cassy NORRIS eguideplus provides online access to the student textbook, answers to all questions in the text, teacher notes on each lesson, additional student activities to engage students and end of topic assessment items. > Preparing students for exams Value pack with StudyON HSC Business Studies our online study, revision and exam practice tool that includes actual past HSC exam questions, progress tracker, multimedia and more! Monitor your students' progress and pinpoint strengths and weaknesses with StudyON Teacher Edition. > professional DEVELOPMENT Every year Jacaranda runs a series of events to support teachers with implementing and assessing changing curriculums, using innovative technologies and discovering new ways to inspire students. To register your interest or find out more about events in your area, please visit:

3 Stephen CHAPMAN Rosalinda GALLINA Natalie DEVENISH trim size 216mm x 279mm PRELIMINARY COURSE Stephen CHAPMAN Mohan DHALL Rosalinda GALLINA Natalie DEVENISH Michael DOHERTY Cassy NORRIS HSC COURSE TABLE OF CONTENTS BUSINESS STUDIES in ACTION 5TH EDITION HSC COURSE BUSINESS STUDIES in ACTION 4TH EDITION BUSINESS STUDIES in ACTION 5TH EDITION PRELIMINARY COURSE: TABLE OF CONTENTS TOPIC 1 THE NATURE OF BUSINESS 1. The role of business 2. Types of businesses 3. Stephen Influences CHAPMAN in Mohan the DHALL business Rosalinda environment GALLINA Natalie DEVENISH Michael DOHERTY Cassy NORRIS 4. Business growth and decline TOPIC 2 Business Management 5. The nature of management 6. Achieving business goals 7. Management approaches 8. Management process 9. Management and change TOPIC 3 Business PLANNING 10. Small to medium enterprises (SMEs) 11. Influences in establishing a small to medium enterprise 12. The business planning process 13. Critical issues in business success and failure HSC COURSE: TABLE OF CONTENTS Topic 1 Operations 1. Role of operations management 2. Influences on operations management 3. Operations processes 4. Operations strategies Wotif case study Topic 2 MARKETING 5. Role of marketing 6. Influences on marketing 7. Marketing process 8. Marketing strategies Wotif case study Topic 3 Finance 9. Role of financial management 10. Influences on financial management 11. Processes of financial management 12. Financial management strategies Wotif case study Topic 4 Human Resources 13. Role of human resource management 14. Influences on human resource management 15. Processes of human resource management 16. Strategies in human resource management 17. Effectiveness of human resource management Wotif case study

4 TOPIC 4 HUMAN RESOURCES FOCUS AREA The focus area of this topic is the contribution of human resource management to business performance. OUTCOMES Students should be able to: evaluate management strategies in response to changes in internal and external influences discuss the social and ethical responsibilities of management analyse business functions and processes in large and global businesses explain management strategies and their impact on businesses evaluate the effectiveness of management in the performance of businesses plan and conduct investigations into contemporary business issues organise and evaluate information for actual and hypothetical business situations communicate business information, issues and concepts in appropriate formats. Role of human resource management Effectiveness of human resource management Key influences on human resource management HUMAN RESOURCE MANAGEMENT Processes of human resource management Strategies in human resource management 2 TOPIC 4 Human resources

5 The best of both worlds Molly s story Molly is a senior lawyer and had worked for Connor Partners, a Melbourne- based legal firm for several years before taking maternity leave to have her first child. The time had come for her to return to work and while she was keen to go back to her job, her preference was for part-time work and if possible, variable start and finish times. A month before her scheduled return she approached a senior partner at her law firm about her preferences. The senior partners at her firm organised a time to meet with Molly where she was informed that flexible arrangements were possible. There was also the possibility of a job-share arrangement with another of the senior partners, Spiro, who was nearing retirement and wished to work part-time too. The job-share would require both Molly and Spiro to be in the office on Wednesdays to liaise. Connor Partners were happy to accommodate both employees and past experience had indicated that clients were also pleased to continue working with people who were familiar to them. Situations such as this are becoming common in the workplace as employees seek a positive work life balance and businesses want to demonstrate more socially responsible behaviour towards employees. Enterprise agreements and the Fair Work Act allow for such flexible arrangements between staff and employers. A diverse workplace such as Connor Partners that supports its employees is an indication that businesses are becoming increasingly aware that human resource management is the key to a happier workplace and consequently better business performance.... businesses want to demonstrate more socially responsible behaviour towards employees TOPIC 4 Human resources 3

6 CHaPTer 14 Key influences on human resource management BizWOrD Stakeholders are any individual or group that has a common interest in or is affected by the actions of an organisation. Parliament passes legislation introduced by government and reviewed by upper house (Senate). EMPLOYEES TRADE UNIONS MAY REPRESENT EMPLOYEES Objectives Better wages Better working conditions Meaningful jobs Job security Participation in decisions 14.1 Stakeholders in the human resource management process Stakeholders are any individual or group that has a common interest in or is affected by the actions of an organisation. Stakeholders have a common interest in the survival and success of the business. However, not all their interests are shared conflict can arise due to differences and competing interests (see figure 14.1). GOVERNMENTS Objectives Workplace reform and higher productivity International competitiveness Compliance with legislation Higher living standards and employment Government departments and agencies then implement government policies. Conflict or cooperation possible at all levels Employees may bargain individually as an employee, or as an independent contractor with a business. Fair Work Commission helps make agreements and resolve disputes. It determines annual safety net increases and has divisions in the Federal Court, that judge breaches of industrial law. EMPLOYERS EMPLOYER ASSOCIATIONS Objectives Increase profit Increase flexibility Minimise costs, be competitive Expand business Develop new products Maximise customer service Concept code: Practice HSC exam questions BSH-083 FIgure 14.1 Stakeholders in the human resource process and their interests Employers Employers, for legal purposes, are those who exercise control over employees, have responsibility for the payment of wages and/or salaries and have the power to dismiss employees. They handle human resource management issues on a 4 TOPIC 4 Human resources

7 daily basis. Some spend over half their work day on matters related to this area, including involvement in developing programs that focus on improving business performance. Employers responsibilities are increasing, as recent legislation today encourages them to negotiate agreements and resolve disputes at the individual workplace. However, employers have been widely criticised in many management surveys for failing to tackle issues in managing employees effectively. A recent survey of more than 7600 people found people management to be the most serious failing of Australian leaders, and was cited 2.5 times more frequently than any other management failing. Improving management training in Australia is therefore important in improving human resource management. Under recent legislation, employers have gained more power to make agreements relevant to the individual workplace or enterprise. Not all employers support government policy enough to engage in full confrontation with unions and employees, as the costs of such confrontation may be very high, with prolonged industrial disputes. Employees Employees are workers under the control of an employer. This control includes the workplace location, the way that the work is to be performed and the extent to which supervision will be exercised. Employees today are, on average, more highly educated than in the past. They become bored very quickly and demand more challenging, interesting work, involvement in decision-making processes and autonomy at their workplace. Many feel driven to build their career through a succession of jobs in a range of different organisations. Following periods of extensive downsizing in recent years, employees no longer trust one business to look after their needs. As a result, the practice of churning moving frequently from one job to another in different organisations is increasing, particularly in service industries. Businesses hoping to retain and motivate skilled staff need to put extra effort into developing staff career and training plans, rewards and opportunities for greater employee involvement. Around one-third of employees are also keen to get more work life balance, to spend more time with their families. The structure of work has changed over the last decade and affects employees access to work. For example, many older workers, women and younger inexperienced people struggle to obtain full-time jobs, particularly in the knowledge-based service sector. These people have become our flexible, casual workforce. Australia has experienced close to full employment for a long time, despite a global economic downturn. Labour shortages are looming due to the ageing population structure in Australia, so prospects for these groups are improving. Extending the working life of the population, by preventing employees from accessing the pension or superannuation, has been discussed in the media and by politicians of the major parties, indicating it is a serious policy consideration. Favourable research supporting the value of older staff should also contribute to more employment opportunities for this group. Many unions have responded to worker fears and have made some employment issues such as job security and limitation on the use of casuals a priority in negotiating agreements. A significant number of employees do, nevertheless, enjoy the flexibility of job sharing, and part-time and casual work to manage family commitments. Employer associations Employer associations were originally created by employers as a counter-party to unions, to represent employers in the making of awards through the conciliation and arbitration system established in They assisted employers in formulating BizWOrD Employers are those who exercise control over employees, have responsibility for the payment of wages and/or salaries and have the power to dismiss employees. BizWOrD Employees are workers under the control of an employer. This control includes the workplace location, the way that the work is to be performed and the extent to which supervision will be exercised. BizFaCT In the May 2009 Federal Budget, the Australian government announced that the age pension age would increase to 67 years of age from It will remain at 65 for anyone born before July The first shift upwards in Age Pension age will occur in 2017 when the eligibility age increases to 65.5 years, and then in six-month increments every two years, until it reaches the age of 67 in FIgure 14.2 A trend for employees to move frequently from one job to another means that businesses need to develop plans to motivate and retain skilled staff. Key influences on human resource management CHaPTer 14 5

8 BizWOrD Employer associations are organisations that represent and assist employer groups. They are usually respondents to the awards (which is cited in the awards) covering the employees of their members, and covering employers in the same or related industry. A log of claims is a list of demands made by workers (often through their union) against their employers. These demands cover specific wages and conditions. Employers may also serve a counter-log of claims on the union. SNaPSHOT The focus of the AiG is to ensure that business views are represented to all levels of government. policies and processed logs of claims served on their members by unions. Their main role today is to act on behalf of employers (especially small businesses) in collective bargaining sessions and before industrial tribunals, courts, commissions and committees. They: provide advice (especially to small businesses) on such matters as awards, unfair dismissals and discrimination issues make submissions to safety net wage cases negotiate agreements lobby governments and other organisations with the views and interests of employers, industries and trade. Unlike unions, employer associations represent employers on a broader range of issues; human resource and industrial relations matters make up just one aspect of their role. Employer associations may function as professional bodies, such as the Australian Medical Association, or as marketing bodies, for example, dairy cooperatives and Meat and Livestock Australia. Others are associations with an industrial relations function within their services, such as the Australian Chamber of Commerce and Industry (ACCI), and the Australian Industry Group (Ai Group) representing the Australian Chamber of Manufactures and the Metal Trades Industry Association (see the following Snapshot). The Australian Industry Group (AIG) The Australian Industry Group (AiG) is Australia s peak industry association and represents more than businesses. It encompasses a number of different industry sectors including manufacturing, engineering, transport, IT, telecommunications and construction. The focus of the AiG is to ensure that business views are represented to all levels of government. This includes matters relating to work health and safety, workplace relations, human resource management and workers compensation. Presently the AiG is engaged in a number of important business issues such as: the introduction of the federal government s Paid Parental Leave Scheme Workplace Gender Equality Agency (WGEA) review of reporting requirements harassment, discrimination and diversity in the workplace work health and safety guidelines, including the role of Safe Work Australia human resource processes including unfair dismissal and redundancy. The change of government at the 2013 federal election will result in a number of challenges for which the AiG will consult with its members. In a recent address, the Chief Executive, Innes Willox, outlined some of these challenges and how they may impact directly upon members and workplace relations. This included: any major changes recommended by the Productivity Commission in respect to the Fair Work Act 2009 will not be introduced until after the next election in 2016 the burden imposed by the Paid Parental Leave Scheme that will be funded via a tax on business profits workplace laws that place a greater emphasis on productivity greater recognition for Individual Flexibility Arrangements between employers and employees union access to the workplace. Snapshot questions 1. Describe the role of the Ai Group. 2. Examine the current focus areas of the Ai Group. 3. Evaluate the importance of surveys conducted by such associations. 4. Justify the importance of employer associations for society. 6 TOPIC 4 Human resources

9 Trade unions Trade unions are organisations formed by employees in an industry, trade or occupation to represent them in efforts to improve wages and the working conditions of their members. The key factors and stages in their development in Australia are summarised in figure The system for resolving industrial disputes, established in 1904 in Australia, gave unions a powerful role in human resources. It provided unions with an official bargaining position in the making of industrial agreements. Through test cases, unions won major improvements in terms and conditions of employment. These established key principles that flowed on to other workers. The concept of unions was brought from Great Britain during the 1800s. Gold rushes create a time of prosperity, which leads to formation of unions and demands for shorter hours. Stonemasons win first 8-hour day in Other unions call for 8-hour day. Late 1800s unions organise on broader scale, on waterfront, in mining, manufacturing and shearing. They form a framework in Trades and Labor Councils from Recession develops and major strikes break out in 1890s. Unions defeated by combined power of colonial governments, employers, the military, police and non-union workers (referred to by unionists as scabs ). Unions decide to take a political vote to survive, and form Labor Party in Labor Party comes to power in 1901, after Federation. Constitution is established. Conciliation and Arbitration Act 1904 enshrines power of unions and employer associations famous Harvester case establishes principle of basic wage for a family. This leads to other awards, establishing principle of comparative wage justice (where wage gains are spread across the wage system to other workers). By 1926, 55 per cent of the workforce was unionised and, in 1927, ACTU was established. Further test cases establish principles including sick leave, long service leave, 40-hour week and, in 1969, equal pay for equal work. White collar unions boom in the 1970s, fostered by closed shop arrangements (compulsory union membership imposed by certain unions in particular industries). These are now some of the largest unions in Australia. Unions use power to lobby on political, social and environmental issues. Union membership falls rapidly from the 1990s a global pattern in high-income countries. BizWOrD Trade unions are organisations formed by employees in an industry, trade or occupation to represent them in efforts to improve wages and the working conditions of their members. FIgure 14.3 The development of trade unions in Australia since 1800 Key influences on human resource management CHaPTer 14 7

10 Bizfact The peak trade union body is the Australian Council of Trade Unions (ACTU). Some of the larger unions include: Australian Services Union (ASU) Australian Workers Union (AWU) Australian Manufacturing Workers Union (AMWU) Construction, Forestry, Mining and Energy Union (CFMEU) Finance Sector Union (FSU) Maritime Union of Australia (MUA) Transport Workers Union of Australia (TWU) Textile, Clothing and Footwear Union of Australia (TCFUA) Figure 14.5 Reasons for the decline in union membership Union membership peaked at 51 per cent in 1976, falling to 46 per cent of all employees in It has fallen dramatically since, as seen in figure 14.4, reaching the current level of 18 per cent of the workforce, where it has remained steady for the last few years. In addition: 20 per cent of full-time and 14 per cent of part-time employees belong to a trade union 43 per cent of government workers compared with 13 per cent of private industry workers are trade union members the highest levels of trade union membership are in education and training (38 per cent) and the industries with the lowest levels of union membership are rental, hiring and real estate services, and professional, scientific and technical services with 3 per cent 68 per cent of workers have never belonged to a trade union. % Unionisation rates Community attitudes often favour individual rather than collective approaches to problems. Collapse of the centralised wage-fixing system Males Females Figure 14.4 Trade union membership in Australia has fallen dramatically. Having contributed so much to winning employee rights over the last decades, unions are now under pressure globally as membership declines to historically low levels. In response, unions are expanding their range of services and becoming more active in recruiting to regain membership numbers. As well as providing representation in disputes, the range of services offered by a union to members might now include free or discounted legal services, superannuation schemes, cheap home loans, training programs through TAFE, insurance, cheap holiday units to rent, income protection against illness or accident, occupational health and safety advice, and many more. The major reasons for the decline in union membership are shown in figure Privatisation of public businesses Decline in workplace size lower levels of unionisation more common Poor image given of unions in media Reasons for the decline in union membership Economic changes and changes in the composition of the workforce Decline in manufacturing employment (traditionally heavily unionised) due to technological change and structural change Recent legislative changes, which reduce power and role of unions (e.g. banning of closed shops ) Growth of service industries (poorly unionised workers don t see need to unionise) Unions became too dependent on tribunal system in past; lost contact at grass-roots level. Globalisation Feminisation of workforce; women less likely to unionise Growth of casual/part-time sector and contract labour (hard to unionise) 8 TOPIC 4 Human resources

11 The Transport Workers Union (TWU) The TWU has been in existence for more than 100 years and today represents more than working men, women and owner-operators in Australia across a range of industries including mining, oil, gas, public transport and waste management. The main role of the TWU, like most unions, is to promote the interests of its members in securing better pay, conditions and, due to the nature of the work of its members, safety. Through its national presence the TWU aims to exert political and industrial influence in workplaces and to lobby levels of government through media organisations so that its members are treated fairly and work in safer places of employment. More recently the TWU has been involved in the industrial unrest at Qantas. In the turmoil that seems to be apparent in Australia s aviation industry, working conditions are under threat. Employees, many of them members of the TWU, have seen colleagues losing their jobs, creating an insecure workplace lacking in industrial harmony. TWU members have been proactive in protecting worker rights and conditions in an attempt to provide a more secure workplace and see their actions at Qantas as attempting to preserve Australian jobs both now and in the future. Snapshot questions 1. Outline the role of the TWU. 2. Explain how the TWU represents the views of its members. 3. Evaluate how effective the TWU has been in securing jobs at Qantas. 4. Do unions such as the TWU have a role in today s workplace? Discuss. Governments and government organisations Governments are important stakeholders in the human resource management process. Over time, they have significantly affected the industrial relations system as a result of their key roles, as follows: Legislator. Our elected representatives pass laws in parliaments (state and federal), which provide the legal framework for industrial relations. Legislation has also led to the growth of the judicial system, and the institutions and processes used by employers and employees to conduct bargaining and resolve disputes. Employer. Federal and state governments employ almost one-third of Australian workers, as teachers, nurses, clerks, police officers, postal workers, transport workers and in other roles. They are often regarded as pacesetters in terms of responsible industrial relations policies, having introduced practices such as maternity leave, flexitime and affirmative action for women that were eventually adopted in the private sector. Responsible economic manager. Governments operating at the macro level are keen to ensure non-inflationary, stable economic growth and a high standard of living for all Australians. At times there may be conflict between governments economic goals, which impact on industrial relations. For example, a decision to cut spending through reductions in the size of the public service in order to reduce a budget deficit may conflict with its desire to maintain employment. The decision could also spark widespread industrial unrest. Administrator of government policies on industrial relations. Through the departments and agencies established, governments are able to implement the SNaPSHOT TWU members have been proactive in protecting worker rights and conditions... BizFaCT A global union grouping brings together three global trade unions representing 55 million workers in over 100 countries. The key areas of action for these international unions include developing trade union networks in multinational companies, climate change and sustainable development, and building stronger unions in developing countries. Key influences on human resource management CHaPTer 14 9

12 BizFaCT The Australian Government department responsible for industrial relations matters is the Federal Department of Employment. This department is responsible for national policies and programs that assist people locate and maintain employment as well as work in safe, fair and productive workplaces. BizWOrD Statutes are laws made by federal and state parliaments; for example, laws relating to employment conditions. legislation they enact. This is achieved through publishing information and guidelines providing advice to the government and the public and investigating breaches of legislation. Representative of Australia in the international arena, in foreign affairs, trade and international labour matters. Australia is a foundation member of the International Labour Organization and has been represented on its governing body. As a result of its membership of such organisations, the government generally implements legislation based on the treaties and conventions it signs with international organisations. Social justice legislation passed in relation to discrimination, and human rights originated in these treaties and conventions. FIgure 14.6 Governments (both state and federal) perform many roles that impact on the human resources process; for example, the roles of legislator, employer, economic manager, policy administrator and representative of Australia on the international stage. Governments have attempted to increase their power to regulate the industrial relations system through use of the External Affairs and Corporations powers (among others) given under the Constitution of Australia. Recent government policy has focused on reducing the powers of industrial tribunals and encouraging decentralised bargaining in the workplace (enterprise). Since and the introduction of the Fair Work Australia Act, all the states, except Western Australia, referred their industrial relations powers to the Commonwealth. The aim of the federal government was to create a national system, which would simplify industrial relations so that employers were not forced to negotiate under multiple jurisdictions and to stop employees and unions from shopping around for the best deal. These arrangements were intended to reduce business costs through creating greater certainty and efficiency in dealing with industrial matters. Statutes Statutes are laws made by federal and state parliaments; for example, laws relating to employment conditions (see table 14.1). Until recently, Australia has operated a dual system of industrial relations since federation. This has arisen as 10 TOPIC 4 Human resources

13 the Constitution awards the Commonwealth Government limited powers to make laws about industrial issues and allows the states to make laws about matters not covered under the Constitution, known as residual powers. These statutes provide the framework for awards and agreements, and the resolution of disputes and require employers to: meet work health and safety requirements maintain workers compensation insurance provide all employees with superannuation, annual leave and long-service leave ensure employment practices in the workplace are free from discrimination on the basis of age, sex, physical or mental disability, marital status, family responsibility, pregnancy, union membership, political opinion, race or social origin give each new employee, covered by the national industrial relations system, a Fair Work Information Statement. This statement provides basic information about employee rights. Legislative power Industrial relations Act Executive power Industrial relations regulations Judicial power Case for breach of award conditions brought against employer Legislation passed by parliament Made by governor/ governor-general on Case brought before tribunal/court advice of government/ government departments Figure 14.7 The functions of government (state or federal) in workplace relations Table 14.1 Federal legislation Law or test case Date Features Conciliation and Arbitration Act 1904 Gave the Conciliation and Arbitration Commission power to prevent and settle industrial disputes extending beyond the limits of the state. Harvester case 1907 Established the basic wage for full-time male worker with wife and two children. Equal Pay case 1969 Principle of equal pay for equal work established for women. Trade Practices Act 1974 Secondary boycotts (provisions) made illegal. Jurisdiction for this later moved to Australian Industrial Relations Commission, as ILO (International Labour Organization) report suggested it interfered with the right to strike. Racial Discrimination Act 1975 Discrimination in employment on the basis of race, colour, national or ethnic origin prohibited. Maternity Leave case 1979 Test case on maternity leave won by ACTU. Sex Discrimination Act 1984 Prohibited sexual harassment and discrimination on basis of sex, marital status and pregnancy. Affirmative Action (Equal Opportunity for Women) Act 1986 Required all private sector employers and all higher education institutions to implement affirmative action programs for the employment of women and to submit annual reports on their progress. (continued) Bizfact Section 51 (xxxv), the most important section of the Constitution for industrial relations, gave the federal government the power to:... make laws for the peace, order and good government of the Commonwealth with respect to:... (xxxv) Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State. The effect of this Section was that: a dispute (actual or pending) must exist before the tribunal could intervene the dispute must be an industrial matter the dispute must extend beyond one state. Key influences on human resource management CHAPTER 14 11

14 BizWOrD A constitutional corporation is one that falls under section 51(xx) of the Constitution of Australia identified as foreign corporations and trading or financial corporations formed within the limits of the Commonwealth. A modern award is an industry or occupation-based award which covers all private sector employers and employees who perform work that falls within their scope. They replace all existing national system awards (except those applying to a single enterprise). They do not cover employees earning higher incomes. TaBle 14.1 (continued) Law or test case Date Features Industrial Relations Act 1988 Award restructuring introduced under the structural efficiency principle (SEP). Parental Leave test case 1990 Federally covered male employees given opportunity to take leave to mind newborn children, etc. Industrial Relations Reform Act 1993 Improved safety net provisions for employees, through the award system and minimum entitlements. Improved arrangements for direct bargaining through both certified enterprise agreements (between employers and unions) and enterprise flexibility agreements (non-union individual agreements). Protection against unfair dismissal. Workplace Relations Act 1996 Revised framework for enterprise bargaining, allowing for collective and individual agreements, with or without union involvement. Tighter restrictions on industrial action. Limited arbitration role for AIRC. Fair Work Act 2009 National framework for industrial relations implemented. Covers most private employees. All states refer powers with exception of WA. Ten National Employment Standards set. Collective bargaining emphasised. Since January 2010, Australia has shifted from a dual federal and state industrial relations system to a national industrial relations framework. This move recognises the efficiency of a more standardised system to business, particularly national and foreign owned businesses that previously had to manage employees operating under different state and national systems. This system, implemented under the Fair Work Act 2009, is administered by the federal government. It covers all employees of constitutional corporations in all states and most private employees formerly covered under state awards and enterprise agreements. The system gives employers and employees the same workplace rights and obligations, regardless of the state they work in. Key elements of the framework include: a national framework for industrial relations covering most private employees of all states except Western Australia ten National Employment Standards (NES) developed to provide basic protections to employees collective bargaining and good faith bargaining required by all parties modern awards for specific industries and occupations enterprise bargaining continued annual National Wage Case sets minimum wage protection from unfair dismissal Fair Work Commission administers the Fair Work Act 2009 and the Fair Work Ombudsman is responsible for promoting unified, supportive and productive workplace relations that comply with the Fair Work laws. The 122 modern awards cover most employees in a wide range of industries, and replace thousands of previous state and federal awards. Together with the NES and the national minimum wage order, they make up a safety net for employees covered by the national workplace relations system. They do not replace enterprise awards, which are made with a specific enterprise. 12 TOPIC 4 Human resources

15 Now we've got a national competition policy and a national corporations policy, it's time for a national industrial relations system too! Any legislation that helps us cope with prolonged industrial action is great. It is a worry that today you can have faceless men in a Melbourne building making decisions about wages for any location in Australia. Business in Australia has a very free industrial environment. Its ability to choose whether it wants to negotiate with employees or lock them out is unique in the world. FIgure 14.8 Views of some employers supporting reform of the industrial relations system Industrial tribunals and courts Industrial tribunals exist at the federal and state levels to enforce laws established by governments. The Fair Work Commission today plays a role in ensuring that the bargaining process and any associated industrial action occur according to law. The Fair Work Commission follows in the footsteps of the longstanding Australian Industrial Relations Commission (AIRC), formerly the Australian Conciliation and Arbitration Commission. Its primary functions include settling disputes through conciliation, supervising the making of agreements or awards and award simplification, hearing appeals and handling unfair dismissal cases. The Fair Work Commission assists in resolving disputes involving employers, employees, unions and employer associations who are covered by the national workplace relations system. Through these functions and specific cases, the Fair Work Commission determines questions about future rights of employees and employers. Much of the Fair Work Commission s work is conducted by individual members or groups of members who are responsible for specific industries or disputes, and are skilled in mediation, conciliation and arbitration. The Fair Work Commission members come from a diverse range of employment backgrounds and must have knowledge or experience in one or more of the fields of workplace relations, economics, social policy, business, industry or commerce. BizWOrD Awards are legally enforceable, formal agreements made collectively between employers and employees and their representatives at the industry level. They are determined by an industrial court or tribunal and set out minimum wages and conditions of employees. Award simplification is the process of reducing the number of matters in each award and eliminating inefficient work practices. Key influences on human resource management CHaPTer 14 13

16 BizFaCT A full panel (bench) of at least three Fair Work members, including a Deputy President, is needed to: hear matters of significant national interest such as test cases on matters concerning family leave, superannuation and public holidays, and establish principles about the making and varying of awards certify multiple business agreements hear appeals against orders, or cancel and suspend awards and orders arbitrate after a bargaining period is terminated. BizWOrD Judicial power refers to the power of courts to interpret and apply laws. FIgure 14.9 A cartoonist s interpretation of the role of tribunals A panel of seven senior members, the Fair Work Commission s Expert Panel, is responsible for hearing annual wage cases and setting minimum wages for employees in the national workplace relations system. Breaches of the Fair Work Commission s orders can lead to fines of up to $6600 for individual workers or $ for unions. Federal Court The Federal Court of Australia is a judicial court. Under the Constitution, only courts have the judicial power to determine disputes about existing rights and to make decisions about these matters. The Federal Court has a division that enforces industrial relations legislation by administering court actions that arise under Australian industrial laws. It handles cases relating to industrial action and breaches of industrial laws, interprets industrial legislation, and is able to impose penalties for the breach of an award or order, and discrimination or victimisation under industrial and human rights legislation. It also has the power to approve the disamalgamation (splitting up) of unions, declare unauthorised action taken during a dispute and hear cases under the Corporations Act 2001 (Cwlth). Other government agencies A number of other federal and state government agencies are also stakeholders in the human resources process. For example, the roles of the Australian Human Rights Commission (HREOC), the Workplace Gender Equity Agency (WGEA) and state organisations such as the Anti-Discrimination Board are to implement particular areas of government legislation. In the area of occupational/work health and safety, the federal National Occupational Health and Safety Commission Act 1985 established the National Occupational Health and Safety Commission, now Safe Work Australia. Safe Work Australia began operating as an independent statutory agency in Its primary responsibility is to improve occupational health and safety, and workers compensation arrangements across Australia. Recognising the need to standardise and harmonise work health and safety systems around Australia, the federal government developed, in collaboration with 14 TOPIC 4 Human resources

17 each state government through the Australian Chamber of Commerce and Industry (ACCI) and the Australian Council of Trade Unions (ACTU), a new framework for a national occupational and work health and safety system. Society In 1948, the General Assembly of the United Nations, consisting then of 56 countries, passed the Universal Declaration of Human Rights, recognising the importance of work to people s lives, and the need for fair and just conditions and rights for those at work (see figure 14.10). Article Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. 2. Everyone, without any discrimination, has the right to equal pay for equal work. 3. Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. 4. Everyone has the right to form and to join trade unions for the protection of his interests. Article Everyone has the right to rest and leisure, including reasonable limitation of working hours and periodic holidays with pay. Source: UN Declaration on Human Rights FIgure Articles 23 and 24 from the Universal Declaration of Human Rights One of the most significant issues for any voter is their job. If there are threats to employment or conditions at work, whether as a result of planned legislation, economic conditions, pressure arising from global competition or adverse social impacts, voters make their views clearly known. The relationship between employers and employees has often been a battleground, as reflected in frequent disputes and changes in legislation in Australia over the last decades. As global competition increases the pressure on businesses to become leaner, the need for more efficient operations, global business consolidation and rationalisation of production has increased. Multinational corporations increasingly use contractors to supply or manufacture key components or services, creating opportunities globally for suppliers with the most cost effective operations. Often the process of relocating production offshore, or shifting production regularly to lower cost locations, leads to dislocation and structural unemployment in the communities left behind. For other communities, there is constant pressure to do more with less, to work longer hours and to accept hard working conditions to retain jobs. Community demands for safety and wellbeing at work have increased over recent decades, as has the pressure to eliminate discrimination against female, indigenous and disabled members of the working community. For businesses, it means an ongoing battle between the need for the business to find ways to reduce its biggest cost labour as pressure increases from global competition, and the needs of employees, particularly those with dependent families. Summary The major stakeholders in the human resources process are employers, employees, employer associations, trade unions, government and government agencies, and industrial tribunals and courts. Concept code: BizFaCT Practice HSC exam questions BSH-084 The federal government elected in 2013 is moving slowly regarding its industrial relations policy. Some people are sceptical that it may attempt to erode the influence of unions and the right to collective bargaining in the workplace. They believe that the government needs to ensure that its policy does not revisit the past, when collective rights were reduced and replaced with a greater emphasis on individual agreements that were seen to be unfair. Key influences on human resource management CHaPTer 14 15

18 exercise 14.1 Each stakeholder has perspectives that may conflict or be shared with those of other stakeholders, leading to conflict or cooperation. Stakeholders are increasingly operating at a variety of scales and developing global networks in response to the globalisation of business. Membership of trade unions has declined dramatically over the last decades at a global level in response to many factors, including the shift to less hazardous work in the increasingly dominant service sector. To simplify industrial relations and improve efficiency, a national system of industrial relations has been created since 2007 under the Labor government. Government statutes provide the framework for employment conditions. Since January 2010, Australia has shifted from a dual federal and state industrial relations system to a national industrial relations framework. The system is implemented under the Fair Work Act Industrial tribunals and courts enforce the employment laws. The Fair Work Commission is the national industrial tribunal that replaces the Australian Industrial Relations Commission. Its powers have been expanded to allow it to hear and settle disputes, supervise agreement making and award simplification. Other government agencies are also stakeholders in the human resources process including the Australian Human Rights Commission (HREOC). Society has a number of expectations regarding employment conditions. revision 1 Identify the major stakeholders in the human resource management process. 2 Describe the major objectives of employers and trade unions in the human resource management process. 3 In small groups, use the brainstorm technique to identify the advantages and disadvantages of employers being given greater power to make agreements for a specific individual, workplace or enterprise. 4 Summarise the major factors changing the nature of work today. 5 With employees being more educated today, evaluate the need for unions. 6 Summarise the aim of the federal government in introducing the Fair Work Act Since January 2010, Australia has shifted from a dual federal and state industrial relations system to a national industrial relations framework. Explain. 8 State the main elements of the Fair Work Act Study figure 14.8 and select the comment you most agree with. Justify your selection. 10 Describe the role of the Fair Work Commission. 11 Explain the impact of increased global competition on (a) employers and (b) employers. extension Weblink Fair Work Ombudsman 1 Evaluate the potential success of global links developed by unions. 2 Visit the Fair Work Ombudsman weblink in your ebookplus and assess the value of this website in providing information about workplace rights and rules. 3 After researching online, explain the issue of shifting to a national system of occupational health and safety. It has not been a popular decision in every state. 16 TOPIC 4 Human resources

19 14.2 legal influences the current legal framework The employment contract creates obligations for both employer and employee, and all businesses operate within a legal framework of common law and statute law that is, law passed by federal and state parliaments in Acts. Legislation covers the nature of employment contracts and agreements; dispute-settling methods (as a result of our international agreements); protection of human rights in employment; and employer responsibilities for tax payments on behalf of employees. Employee welfare is provided for through work health and safety legislation and specific legislation such as the Superannuation Guarantee, under which all employers are obliged (either under awards or the legislation) to pay superannuation contributions for employees, whether or not they are on awards. Changing community and worker expectations on social justice (equal employment opportunity, anti-discrimination), safety and environmental issues are increasingly reflected in legislation and work practices. Following the election of the Rudd Labor government in 2007, a new legislative framework for industrial relations was enacted through the Fair Work Act Unregistered individual common law contracts of employment, casual work and independent contracting remain common options for individual employment arrangements, with many employees indicating they are offered employment under these conditions on a take it or leave it arrangement. These arrangements shift the responsibility of organising employment conditions, such as sick and carers leave, onto the employee. This has led to community concerns about the financialisation and privatisation of risk occurring, as responsibility for support is shifted from governments and employers to employees. Flexibility works for employers, but less so for employees. We have, nevertheless, shifted from a strongly centralised industrial relations system in the 1980s to a decentralised and more fragmented system today, based increasingly on bargaining at the workplace (enterprise) level. Successive Australian federal governments since the 1980s have supported a decentralised view of industrial relations. The Fair Work legislation referred to above was aimed at ensuring that the government s role in determining the details of employment contracts would be limited to creating the legal framework that facilitated the negotiation of enterprise agreements, the National Employment Standards, minimum wage hearings and awards. In announcing his government s industrial relations policy, the Prime Minister Mr Abbott said he would prefer to seek a mandate from the electorate before making any major changes to Fair Work laws. Therefore any significant policies or changes to existing laws would be deferred until This has resulted in much conjecture about the future role of the existing Fair Work laws under a Liberal National government. Prior to the election in 2013 the Liberal Party did however release a policy document that addressed a number of workplace and industrial issues and gave some insight into their approach to industrial relations. The policy document began Workplaces are important to our economy and society. Higher living standards, better pay and more jobs all depend upon having fair, productive and effective workplaces. BizWOrD Social justice in the workplace involves businesses being responsible or behaving in a fair and ethical manner towards their employees, customers and the broader community. A centralised industrial relations system is a collectivist approach in which disputes are referred to industrial tribunals, such as the Fair Work Commission, for conciliation and arbitration. In a decentralised industrial relations system, employers and employees negotiate wages and working conditions in the individual workplace, through collective or individual bargaining and without the involvement of tribunals. Key influences on human resource management CHaPTer 14 17

20 BizWOrD The Productivity Commission is the Australian Government's independent research and advisory body in respect to a variety of economic, social and environmental issues affecting the welfare of Australians. Its function is to help governments make more effective policies in the long term interest of the Australian community. BizWOrD An employment contract is a legally binding, formal agreement between employer and employee. Despite major changes being held over for the time being, the policy articulated a number of pertinent industrial issues that would be examined in the immediate period. These include: 1. seeking to improve the Fair Work legal framework through a review of the operation and impact of the Fair Work laws by the Productivity Commission 2. the introduction of a paid parental leave scheme that will give the child s primary carer six months leave based upon their full replacement wage/ salary or the national minimum wage (whichever is more) as well as paid superannuation 3. changes to union right of entry provisions to redress the government s belief that current arrangements are unreasonable and favour unions 4. encouraging a greater use of the Individual Flexibility Arrangements (IFA) in enterprise agreements giving workers and employers a greater opportunity to agree on working conditions that suit their workplace needs, such as leaving early to coach their child s sporting team. It must, however, still pass the better off overall test which ensures that the worker is not disadvantaged by any change to employment conditions. 5. ensuring that work health and safety conditions around the issue of bullying at work is complied with. The worker must first seek assistance from an independent regulatory agency before more formal action is taken. However, any reinforcement of the regulation is also extended to union officials and their behaviour towards workers and employers. 6. promoting enterprise bargaining in the workplace and actively encouraging dialogue between workers, their representatives and employers, particularly if industrial action occurs. Industrial action should be seen as a last resort option. 7. where an enterprise agreement is to be approved by the Fair Work Commission it must be satisfied that the issue of productivity improvements has been discussed. Source: Improving the Fair Work Laws The Liberal Party of Australia, improving-fair-work-laws The employment contract The most basic relationship in employment and the workplace is between employer and employee. An employment contract is a legally binding, formal agreement between employer and employee. Every employee has a contract with an employer. A written contract gives more protection to both parties than a verbal contract, as disputes often occur over contracts if working arrangements are not clear and it is one person s word against another. Usually employment contracts will be of two forms: contracts of indefinite duration and contracts of a fixed term. Contracts of an indefinite duration are the most common type of employment contract and allow for the employee to remain employed by the business until either the employee or the employer gives notice that they wish to terminate the employment. The relevant laws or the contract itself determines the period of notice. Contracts of a fixed term are ones that expressly define a date or upon completion of a specific task; for example, the employee is engaged for a period of 12 months and the contract does not exist beyond that period, or the employee s period of work will cease to exist at the completion of a project and the relationship comes to an end. A written contract encourages the parties to clarify the key duties and responsibilities of a job (see figure 14.11). 18 TOPIC 4 Human resources